NACDS supports Florida hospital labor case

February 15, 2011

NACDS has filed a brief in support of an Orlando hospital fighting a Department of Labor ruling.

The National Association of Chain Drug Stores (NACDS) has filed a brief in support of an Orlando hospital fighting a Department of Labor (DOL) ruling. An administrative law judge ruled that because Florida Hospital of Orlando provides medical care to military personnel, retirees, and family members under the TRICARE system, it must meet new record-keeping and employment requirements for federal contractors.

“Pharmacies are not party to this case,” said Don Bell, NACDS’ chief counsel. “However, it is entirely possible that the [DOL] could extend this wording well beyond hospitals. This ruling talks about ‘providers,’ not about ‘hospitals.’”

The broad wording in the administrative decision in United States Department of Labor v. Florida Hospital of Orlando could be applied to chain and independent pharmacies around the country, Bell said. Many NACDS member chains fill TRICARE prescriptions as part of a pharmacy network created by Express Scripts under a federal contract.

The problem, Bell said, is that federal contractors and subcontractors must meet detailed DOL dealing with affirmative action, job postings, inspections, and reporting. DOL regulations require these employers to record and track gender, race, and disability status of every job applicant; of employees who receive pre-employment testing, training, promotions, or demotions; and of anyone who is subject to related employment activities.

Florida Hospital of Orlando provides medical services to TRICARE beneficiaries under a contract with Humana Military Healthcare Services, a wholly owned subsidiary of health insurer Humana, Inc. According to the hospital, providing medical services under a Humana contract does not make the hospital a federal subcontractor. DOL holds that providing medical care to TRICARE beneficiaries does make a provider a federal subcontractor and therefore subject to specific employment-related tracking and reporting requirements.

Some chains say the cost of meeting DOL reporting requirements would surpass their total TRICARE sales revenue.

“Our goal is to let the agency know that a decision against the hospital has ramifications beyond this one hospital,” Bell said. “Our aim is to put pharmacy on their radar screen. If you are going to apply a new burden for which the costs may outweigh the profits, you may well see pharmacies withdrawing their participation in TRICARE. That would not be in the best interests of the federal government or pharmacies, and least of all our military beneficiaries and their dependents.”